Northwest Diversified, Inc. v. Desai

• Decision Date: 30 September 2004
• Docket Number: No. 1-01-1902.,1-01-1902.
• Parties: NORTHWEST DIVERSIFIED, INC., Assignee of Dearborn Wholesale Grocers, Inc., Plaintiff-Appellant, v. Nikunj D. DESAI, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

818 N.E.2d 753

353 Ill. App.3d 378

288 Ill.Dec. 818

NORTHWEST DIVERSIFIED, INC., Assignee of Dearborn Wholesale Grocers, Inc., Plaintiff-Appellant, v. Nikunj D. DESAI, Defendant-Appellee.

No. 1-01-1902.

Appellate Court of Illinois, First District, First Division.

September 30, 2004.

Cindy M. Johnson of Johnson & Associates, for Plaintiff-Appellant.

Paul E. Peldyak, Chicago, for Defendant-Appellee.

Justice McBRIDE delivered the opinion of the court:

Plaintiff-appellant, Northwest Diversified, Inc. (Northwest), appeals from judgments entered in favor of defendant-appellee, Nikunj Desai, on May 11, 2001, and May 23, 2001. On November 2, 1995, Dearborn Wholesale Grocers, Inc. (Dearborn), obtained a judgment in Cook County against Desai in the amount of $17,672.79, plus $300 in attorney fees and costs. The judgment arose out of a monetary dispute between Dearborn and Desai with regard to a food and liquor business operated by Desai in Lake County. Ultimately, the judgment was assigned from Dearborn to Northwest, which is engaged in the business of purchasing judgments and attempting to collect them.

At some point in the fall of 1998, Northwest discovered that Desai owned residential property in Lake County, Illinois, and Northwest obtained a judgment lien against the property by recording a memorandum of judgment in Lake County. Using the sheriff of Lake County (Sheriff), Northwest attempted to levy and to execute the judgment against Desai's residential property. Northwest successfully bid on the property at a sale conducted by the Sheriff on April 19, 1999. However, Desai filed a motion to set aside the Sheriff's sale on the ground that the assignment between Dearborn and Northwest was invalid.

On May 6, 1999, Judge Glynn Elliott entered an order arresting the judgment and the levy sale, finding, among other things, that there was no valid assignment of record and because Northwest was not a party to the original judgment proceedings, it could not collect on the judgment against Desai.

Through a series of orders, which we detail extensively below, another judge, Jacqueline Cox, vacated the order arresting the sale finding that the levy sale extinguished the trial court's jurisdiction. Judge Cox further held that when Desai cashed a homestead exemption check, he accepted the levy sale and could not take the exemption and also redeem the property. Subsequently, however, Judge Cox vacated that order and found that Northwest "was not a party to the judgment at the time of the levy sale in that the assignment of the judgment to Northwest was filed several months after the levy sale". Eventually, Judge Cox entered an order allowing Desai to pay Northwest the redemption amount in exchange for the property. Northwest appeals from those orders.

We state the following background facts and before beginning point out that this case has a long and complicated procedural history in the trial court.

As noted above, Northwest was in the business of purchasing judgments and seeking to collect them. Kenneth Swiatek, president of Northwest, stated in an affidavit that he and Wardell Brooks, a credit manager at Dearborn, discussed the possibility of Northwest purchasing judgments from Dearborn, including Dearborn's judgment against Desai. Brooks informed Swiatek that Dearborn had "written off" the judgment against Desai and that he had the authority to sell the judgment for "whatever he could get." According to Swiatek's affidavit, he and Brooks "reached an agreement" on August 26, 1998, under which Dearborn would assign its judgment against Desai to Northwest for $1. The purported assignment (Brooks assignment), memorialized in written form, was signed by Brooks, identified Northwest as the assignee, and was dated August 26, 1998. Although the Brooks assignment recites that it was given "Upon receipt of good and valuable consideration herein acknowledged and received * * *," the document itself never states what actual consideration was given or that $1 was ever paid by Northwest to Dearborn. We also point out that the affidavit of Swiatek never states that any consideration, specifically $1, was paid by Northwest to Dearborn for the purported assignment dated August 26, 1998.

Swiatek also stated in his affidavit that he learned Desai owned real property in the form of a residence in Lake County, Illinois. On September 9, 1998, Northwest, as the assignee of Dearborn, obtained a memorandum of judgment against Desai in Cook County. In his affidavit, Swiatek stated that he took the memorandum of judgment and the assignment to the office of the court clerk in Cook County. The memorandum of judgment was entered by Judge Spurlock on September 9, 1998, but Swiatek testified that the clerk's office returned the assignment to him unsigned and informed him that assignments of judgment were not filed. The assignment of judgment was not filed in Cook County with the court clerk until June 3, 1999. According to Swiatek, Northwest recorded the memorandum of judgment with the Lake County recorder of deeds on September 10, 1998.

Swiatek also stated that on December 10, 1998, he delivered a letter to the Sheriff and requested that the Sheriff place a levy and execute the judgment against Desai's residential property. During the pendency of the levy, Desai paid Dearborn $5,000 on January 4, 1999, and $2,000 on February 15, 1999, in an attempt to partially satisfy the judgment. Dearborn accepted these payments from Desai.

In a letter dated February 15, 1999, Neil Zweiban, general counsel for Dearborn, informed Northwest that the assignment of the Desai judgment from Dearborn to Northwest was invalid because Brooks, who was not an officer of Dearborn, "had no authority to sell such assets." The letter further indicated that there was never any consideration paid for the assignment and as a result there was no sale of the judgment from Dearborn to Northwest.

On April 6, 1999, Zweiban sent a letter to counsel for Northwest which again indicated that the assignment at issue was "not authorized" and was not given for "adequate consideration." However, the letter proposed certain conditions in order to validate the assignment. These conditions expressly stated as follows:

"[Dearborn] will keep Five Thousand Dollars ($5,000.00) of the funds paid to it [by] [Desai], funds paid in partial satisfaction of the judgment against [Desai]. [Dearborn] will remit the additional funds (Two Thousand Dollars $2,000.00) back to [Desai] as you requested, or we will remit the Two thousand Dollars ($2,000.00) to [Northwest]. We will not interfere in your clients' sheriff's sale provided that [Desai] is given full credit for the Five Thousand Dollar ($5,000.00) payment, or if the Two Thousand Dollars ($2,000.00) is remitted to you [Desai] will receive a Seven Thousand Dollar ($7,000.00) credit. (That is, the judgment amount for [Desai] is reduced by the amount paid)."

In his affidavit, Swiatek confirmed that on April 14, 1999, Northwest "verbally agreed" to the above terms in exchange for a valid assignment.

Zweiban also sent a letter to Desai dated April 15, 1999, which notified Desai that negotiations for the assignment of the judgment from Dearborn to Northwest were on-going and that, in the event a "confirmatory letter" was sent to Zweiban from Northwest's counsel, all rights to the judgment would then "be in Northwest's hands."

Zweiban then sent another letter to Northwest's counsel, dated April 17, 1999, stating that, as of that date, he had not received the letter "confirming the settlement." On April 19, 1999, the date of the Sheriff's sale, Northwest's counsel sent a letter to Dearborn's counsel bearing the same date, which indicated that Northwest agreed to the settlement terms outlined in the letter written by Zweiban on April 6, 1999. On April 29, 1999, ten days after the sale, Dearborn mailed Northwest a check dated April 26, 1999, in the amount of $2,000, made payable to Northwest pursuant to the terms of Zweiban's April 6, 1999, letter. On July 27, 1999, Dearborn "reaffirmed" the prior assignment of judgment to Northwest dated August 26, 1998. After the "reaffirmed assignment," there was no memorandum of judgment ever recorded in Lake County.

While the dispute over the assignment was occurring between Dearborn and Northwest, the Sheriff set a sale for the property on March 15, 1999. In his affidavit, Swiatek stated that Northwest postponed the sale to April 19, 1999, because Dearborn and Northwest were still negotiating the validity of the assignment. Nonetheless, on April 19, 1999, the Sheriff conducted a levy sale for Desai's property. Northwest was the successful bidder in the amount of $25,159.16, which included a $7,500 payment to cover Desai's right to a homestead exemption under section 12-122 of the Illinois Code of Civil Procedure. 735 ILCS 5/12-122 (West 2000). Swiatek also stated in his affidavit that "[a]bout twenty minutes after Northwest successfully bid for the property, Desai appeared at the sale and demanded to satisfy the judgment in full for $10,000," which the Sheriff refused. Northwest was issued a deed to Desai's property by the Sheriff on July 7, 2000.

Within 30 days of the actual Sheriff's sale and prior to the issuance of the deed, Desai filed a motion in Cook County to set aside the Sheriff's sale contending that the assignment of judgment to Northwest was invalid. On May 6, 1999, Judge Elliott heard the motion and found, among other things, that: (1) the attorney for Dearborn notified Northwest that the written assignment was invalid because it was not signed by an officer of the corporation; (2) there was no assignment of judgment of record on file with the court; and (3) Northwest was not a party of record to the original judgment proceedings and thus could not collect and satisfy the judgment. Pursuant to section 2-1204 of the Illinois Code of Civil Procedure, Judge Elliott arrested the judgment and...